Types of Banking Institutions




The reason for which the Bank of England was founded in 1694 was to look after the Government’s debt, commonly called the National Debt, and this is still a most important function. A large proportion of the debt is made up of Government bonds, that is pieces of paper stating that the holder has subscribed such-and-such a sum of money and is entitled to so much interest per year. Two world wars have helped to swell the issue of bonds to some $ 40,000 million. Another sizable slice of debt is in the form of Treasury bills which are rather like bonds with a very short life span before the Government buys them back again and so repays the loan. Their purpose is to provide the government with day-to-day money to cover the inevitable gaps which occur between its disbursements, e.g. on such things as unemployment benefit and its receipts from taxation. A third type of debt is the group of National Savings Securities, of which ordinary Post Office (now National Savings Bank) accounts and Premium Bonds are perhaps the best-known examples.

The Bank of England is the ultimate source from which the general public can obtain cash. Other English banks used to issue their own notes, but now they all use the Bank of England notes. Scottish banks have continued to issue their own, but it is an expensive undertaking, and is closely controlled by the central bank in England.

The Bank also looks after the bank account of the Government just like an ordinary bank does for its customers. Into this account go all tax receipts and any other transfers of money from the various banks, and out of it go all payments.

Because all the important institutions in the City maintain accounts at the Bank, transfers of money between them and the Government, which go on every day, are made very easily. The Bank merely debits one account and credits another. The Bank also holds accounts for important international institutions like the World Bank, for just over a hundred central banks and also for some ordinary foreign banks, making a total of nearly two hundred accounts.

The Exchange Equalisation Account is the name of the fund in which are held the gold and foreign currency reserves of the country. The managers of the fund have the task of intervening from time to time in the otherwise free market for foreign currency, so as to influence the price of the pound in line with Government policy, or simply to try to maintain a reasonable orderly market.

The pound is not the only currency whose price has to be carefully controlled. Most of the major world currencies have the same problems, and all greatly benefit from international cooperation. Dealing with other central banks and managing money on an international scale has become an important side of the Bank’s work. Every month the Governor flies to Basle to spend a week-end in conference with his opposite numbers from the central banks of other western industrial countries.

The object of the bank’s management in the monetary field is to support the Government’s activities in other fields, e.g. taxation policy, export promotion and so on. The methods of control used by the Bank are based on a system in which money available to be borrowed should be rationed by price, not by orders from the Bank or The Treasury.

The Battery of instruments of control the bank has may be summarized as follows:

1. Suggestion and request. From time to time the Bank will make suggestions to the other institutions in the City, indicating the policy the authorities intend to pursue. If they want specific action, the Government makes a “request” like the following:

“Notice to banks.

All banks and finance houses are asked not to provide either loans to person or check trading facilities for the purchase of…”

2. Open market operations. This is the name given to the activities of the Bank in the financial market for control purposes. The point is that by its interventions the Bank can influence markets to move in the directions which it desires.

3. Special deposits and supplementary deposits. From time to time, the Government may wish to reduce the amount of money that people can borrow in order to reduce the amount they spend. An effective way of doing this is to reduce what the banks have available foe lending, and this is done by requiring them to deposit more money at the Bank of England in special accounts from which it cannot be withdrawn until the Bank says so.

 

 

Questions on the text:

 

1. Why and when was the Bank of England founded?

2. What type of securities make up the National Debt?

3. What is the money raised in this way spent on?

4. Enumerate the most important functions of the Bank of England.

5. What is the object of a central bank’s management in the monetary field?

6. What principle does the Bank of England follow in exercising its control over the monetary policy?

7. What instruments of control has the bank got at its disposal?

 

 

Exercise 1.

Say what is true and what is false. Correct the false sentences:

1. Commercial bank’s services are limited.

2. Fiduciary services are handled by trust companies.

3. Commercial banks don’t deal with brokerage services.

4. American state banks offer fewer services than a national bank.

5. The interest on deposits is usually higher in savings and loan associations.

6. Savings and loan associations offer regular commercial services.

7. Every English bank issues its own notes.

8. All the important institutions in the City maintain accounts at the Bank of England.

9. The amount of money available for British borrowers depends on The Treasury orders.

 

 

Exercise 2.

Complete the following:

1. We remit money orders.

A person who remits is a …

A person to whom the money order is remitted is a …

 

2. We transfer bank drafts.

A person who transfers them is a …

A person to whom they are transferred is a …

 

3. You draw out a cheque.

A person who draws a cheque is a …

The bank on which the cheque is drawn is a …

A person to whom the cheque is made payable is a …

 

4. One can pledge assets as security.

A person who pledges assets as security is a …

A person to whom assets are pledged is a …

 

5. Loans are granted.

A person who grants a loan is a …

A person to whom a loan is granted is a …

A person to whom one’s affairs are trusted is a …

 

 

Exercise 3.

Fill in the blanks:

 

In every capital city there are numerous institutions which make loans. There are numerous … institutions. One can also borrow money from the …, though their major function is accepting deposits. People who need a loan for the purchase of land can apply for it to a …. If you need to borrow money for the purchase or repair of your house or just make saving deposits you can call at a …. Many individual companies run … which are formed by combining savings of the people working there. They make loans to their members at a low …. Anyone having problems with trusts or estates can seek advice at a …. They deal with … matters. People interested in the purchase of stocks or shares usually go to a … which specializes in handling….

 

Unit Seven

Active Vocabulary

 

At par по номинальной стоимости

Clearinghouse клиринговая палата

Clear (v) 1) осуществлять клиринг векселей и чеков

2) выплачивать по чеку

Collection инкассация

Collection charge расходы по инкассированию

Commercial paper (US) коммерческие бумаги

Correspondent bank банк-корреспондент

Debenture долговое обязательство, облигация акционерной

компании

Discount house учетный дом

Drawee bank банк-трассант; банк, на который выписан чек

Endorse (indorse) (v) индоссировать

Endorse with recourse (v) индоссировать с правом оборота

Face value номинал

Foreign exchange валюта

Honour a cheque (v) акцептовать чек, оплачивать чек

Incorporated акционерный

Industrial bank промышленный банк

Instalment взнос в уплату в рассрочку

Knock-down price сбитая (минимальная) цена

Liable обязанный, ответственный, подлежащий

Listed stocks акция, зарегистрированная на бирже

Money at call and short notice деньги до востребования или при краткосрочном

уведомлении

Payee получатель платежа

Quotation котировка

Recall (v) отзывать, аннулировать

Redeem (v) выкупать, погашать, изымать

Discount, rediscount (v) (US) учитывать

Refinance рефинансировать

Remit ремитировать, переводить, пересылать

 

 

Dialogue

Read the dialogue:

Interbank Relations in the USA

Student: How many correspondent bank accounts do you have?

Banker: We have reserves in six banks. Two of the accounts are inactive.

S.: Do you use any clearinghouse other than the Federal Reserve Bank?

B.: Yes, we also get a daily letter from our central bank in St. Lawrence.

S.: Are you allowed to make a collection charge on your items from your central bank?

B.: No. We’re agreed to clear them at par.

S.: Will your correspondent banks purchase any instalment loans that you’re not licensed to handle?

B.: Yes, any that our customers are willing to endorse to them.

S.: Do they advise you on your investments, like commercial papers and short-term debentures?

B.: Oh, yes. And each week our New York correspondent sends us their report on financial and economic trends, including quotations on listed and unlisted stocks.

S.: And they handle your foreign exchange?

B.: That’s right.

S.: Suppose I’m remitting by check on your bank an amount due on my note to a bank in California. Will that bank send the check directly to you for collection?

B.: It could do that. But it’ll probably send the check through the regular channels.

S.: What does that mean?

B.: Well, the bank to which your check will send it to the Federal Reserve Bank in its Reserve District. The transit department of that bank will send it to the Federal Reserve Bank in our Reserve District. From there it’s sent to us.

S.: How many Reserve Districts are there?

B.: There are twelve, with one Reserve Bank in each District. Also, most of our lager banking institutions like ours are members of the System, and all checks and other items of exchange flowing through the System are cleared at par.

S.: Par means face value?

B.: Yes. And every bank that handles an item endorses it with recourse.

S.: Does that mean that if a check isn’t honoured by the drawee bank, it’s finally returned to the payee, who is held liable for the amount?

B.: That’s right.

S.: To become member of the System, was your bank required to subscribe to any stock in the Reserve Bank in your District?

B.: Yes. And, to explain further, all national banks must be members of the System. Incorporated State Banks, including commercial banks, mutual savings banks, trust companies and industrial banks, may join the System.

S.: Other than handling items of exchange, what services do Federal Reserve Banks offer member banks?

B.: As fiscal agents of the United State Treasury, they assist in the issue and redemption of government bonds and the refinancing of bonds that have reached maturity. They’ll also accept from us any paper that can be rediscounted, if our cash reserve becomes low.

 

 

Questions on the dialogue:

1. What services do correspondent banks render each other?

2. What are the functions of central banks?

3. If you remit by the check drawn on one bank an amount due on your note to another bank, what route does your check usually take?

4. What does the United States Federal Reserve System consist of?

5. What is the collection charge on checks and other items flowing through the Federal Reserve Banks?

6. What does “endorsed with recourse” mean?

7. What does a bank have to do to become a member of the System?

8. Which banks must be members of the System and which banks may be?

9. What services do Federal Reserve Banks offer to member banks?

 



Поделиться:




Поиск по сайту

©2015-2024 poisk-ru.ru
Все права принадлежать их авторам. Данный сайт не претендует на авторства, а предоставляет бесплатное использование.
Дата создания страницы: 2019-12-28 Нарушение авторских прав и Нарушение персональных данных


Поиск по сайту: